Wednesday, June 4, 2008

Michael Costa Means Business

The New South Wales State budget has the strange distinction of being for the most part warmly welcomed by business groups, while being the subject of outrage from the unions. That’s not exactly the outcome you would normally expect from a Labor Government. However, in this case, it’s no surprise. The division between the government and the unions was on display for the world to see at the recent ALP state conference.

The budget has clearly kicked important goals with the commitment to expend record amounts on infrastructure, and to reduce the tax burden on business. $58 billion has been earmarked for capital investment, and it’s long overdue. Despite the fact that the government is essentially making up for its past negligence, the move has been welcomed even by the government’s critics. Similarly, the move to reduce payroll tax may not go far enough to redress the imbalance between the states, but it does go some way to providing relief for business and incentive to invest in jobs and is to be applauded. The Treasurer clearly wants to get the message across that New South Wales is open for business.

But this comes at a cost. First, the budget confirms the government’s intention to press ahead with the privatization of the electricity industry, despite the fact that both the general public and the union movement are opposed to it. Secondly, the budget requires the public employees of New South Wales to accept wage and salary increases limited to 2.5%, well below the rate of inflation. This has incensed the unions, and it’s easy to understand why. Nurses, teachers, police officers, and other essential workers are being told that their living standards must decline for the good of the state’s finances.

The truth is that many people employed in these essential roles already cannot afford to live near their work, especially within Sydney. In fact, housing affordability is perhaps the biggest missed opportunity in the budget, which is disappointing because it is also one of the biggest challenges confronting the community.